Fabricating a single chip requires 1.6 kg of petroleum and 32 kg of water
Semiconductor manufacturers are under the pressure to meet booming demand while reducing their high environmental impact. The market has grown around 17 percent this year alone. But, as the semiconductor industry grows, so too does its carbon footprint and resource use.
In fact, some semiconductor manufacturers’ carbon emissions have now surpassed those of top automakers. This is notable as a benchmark because the auto industry is well known for its large carbon footprint. For example, TSMC, the world’s largest chipmaker, emitted around 15 million tons of CO2 in 2020 – surpassing automaker General Motors’ emissions – and its annual electricity consumption is estimated to be nearly 5 percent of Taiwan’s entire electricity usage.
In addition, semiconductor production is extremely resource intensive. Fabricating a single 2g chip requires 32kg of water, 1.6kg of petroleum and 72g of chemicals – and billions of chips are produced every year.
Carbon-reduction initiatives can mitigate this impact
It’s important for the semiconductor industry to take action to reduce its carbon footprint. Many of the world’s largest semiconductor companies have already committed to ambitious medium- and long-term (2030 and 2050) sustainability initiatives. In fact, both TSMC and Intel are among those named by Corporate Knights as the 100 most sustainable corporations of 2022. Some semiconductor companies have even joined the RE100 and committed to sourcing 100% of their global electricity consumption from renewable sources. Some are also focusing on initiatives that reduce energy use, water consumption, and waste.
Carbon-reduction initiatives also make semiconductor companies more attractive to equity investors – among other benefits
The semiconductor segment is highly capital intensive and depends upon large investments to remain competitive. Venture capital (VC) firms clearly see the value of investing in the industry – it’s estimated that VC will invest more than $6 billion in semiconductor companies in 2022.
Semiconductor companies can also realize the benefits of sustainability initiatives experienced by many companies outside of the semiconductor domain:
- Improving profitability and value creation: Green operations improve companies’ bottom line. Companies that prioritize environmental, social, and corporate governance (high ESG) initiatives are more profitable and have higher value creation such as cost reductions (e.g. lower energy consumption) and better investment and asset optimization (e.g. more sustainable fabs and equipment) than companies that don’t. Sustainability also positively impacts companies’ market demand, reputation, and supply chains.
- Meeting international sustainability goals: Semiconductor manufacturers are aligning their sustainability practices to meet global goals, such as those set forth in the Paris Agreement and the United Nations Sustainable Development Goals (SDG). For example, they are meeting SDG targets through steps like managing and conserving energy and water and reducing emissions.
- Supporting their customers’ Scope 3 goals: Most companies that use semiconductors – such as the technology and automotive industries – are under scrutiny to improve sustainability themselves. This requires chip manufacturers to step up their own sustainability practices because the bulk of most companies’ total emissions come from indirect emissions that occur in their value chain – i.e. Scope 3 value chain emissions – such as semiconductors. Then proposing sustainable chips to these customers might become a competitive advantage.
- Satisfying end-user priorities: Consumers are increasingly seeking out green companies and energy-efficient products, including the components used in the products.
- Retaining top talent: Semiconductor manufacturers need to attract and retain top talent and a company’s corporate and social governance practices have become a part of that equation. More than half of job seekers consider a company’s sustainability practices an important factor in choosing an employer.
Here’s how semiconductor fabs build a net-zero future
Semiconductor manufacturers’ carbon-reduction roadmaps should start with auditing their fabs’ carbon footprints. With professional guidance, this auditing step creates a full baseline picture of the fabs’ resource and energy use.
On the basis of that complete picture, semiconductor companies can take advantage of expert guidance to then develop a sustainable energy management strategy. These are long-term plans that identify changes that will make the biggest impact, choose action steps, set targets, and advance their sustainability goals.
Let’s walk through one scenario involving a semiconductor manufacturer that sets a goal of net-zero by a certain date: Achieving this goal first requires the company to identify how they buy, use, and track energy. Based on expert advice, the manufacturer determines that replacing energy with green alternatives makes the most sense, and decides to take an energy procurement approach that lets them buy energy based on their price- and carbon dioxide-reduction targets. They further identify other areas for improvement including critical infrastructure upgrades and a multi-faceted efficiency program that drives the greatest savings and operational resiliency. Together, these actions help the chip maker accomplish significant strides toward their climate commitments.
For example, this is how STMicroelectronics will become carbon neutral by 2027
STMicroelectronics, a global semiconductor leader with 11 manufacturing sites mastering all aspects of the semiconductor supply chain, is a good example of what semiconductor manufacturers can do to meet their targets. The company wants to reach carbon neutrality by 2027. To achieve this goal, STMicroelectronics is collaborating with Schneider Electric to create a strategy for carbon neutrality, including conducting energy audits at 14 STMicroelectronics sites and co-developing energy-efficient solutions. We’re working to reduce their manufacturing and design sites’ overall energy consumption, improve the renewable energy sourcing strategy across all STMicroelectronics’ locations, identify and implement the most relevant carbon avoidance and carbon sequestration programs, and reduce STMicroelectronics’ global footprint.
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In 2021, Schneider Electric was named the world’s most sustainable company. Let us show you how you can meet your climate commitments. Read our decarbonization guide or visit the Energy and Sustainability Services website to learn more.